Browsing through that Memory Alpha article somebody posted above, it seems to me that several factors conspired to weaken the Ferengi from the very start. I mean, Michael Westmore talks about how he softened up the original visual conception into what we eventually got, removing any sense of menace from their original 'look' in the process. That can't have helped.

That said, they are effective villains in at least a few episodes (noteably "The Battle" and "Peak Performance", although the former does have a few residual moments of the comedic florishes from "The Last Outpost").

On the other other hand, we have "Rascals". Maybe I'd believe in a bunch of Ferengi taking over the Enterprise if it had happened in Season One, but by the time that episode was filmed the Ferengi had descended completely to joke status. Which is IIRC the reason they were chosen as villains of the episode at all (the writers felt they were the only threat that could be believably stopped by children).